NVDA: Nvidia, Broadcom Lead as Citi Bets on More Upside in Chip Sector

Aug 19 - Citi says semiconductor stocks offer upside and investors should buy dips, with Microchip Technology (NASDAQ:MCHP) as its top pick.

Analyst Christopher Danely told clients the market saw a split reaction during earnings: the SOX fell 5% early on as estimates dropped, but later recovered thanks to AI strength and signs that analog demand is only starting to improve.

Danely expects the Philadelphia Semiconductor Index to climb as AI-driven revenue from companies such as Nvidia (NASDAQ:NVDA), Broadcom (NASDAQ:AVGO) and Micron (NASDAQ:MU) supports earnings. He also highlighted that analog names guided healthier third-quarter sales, noting a 6% quarter-over-quarter uptick consistent with seasonal patterns.

Citi keeps Buy ratings on Texas Instruments (NASDAQ:TXN), Broadcom, Micron, Analog Devices (ADI) and NXP Semiconductors (NASDAQ:NXPI) alongside Microchip. While consensus estimates fell, partly due to Intel (INTC), Danely pointed to rising capex among Meta (META), Microsoft (NASDAQ:MSFT) and Alphabet (GOOG) as a tailwind for AI-related chip demand.

Citi sees AI exposure and early-stage analog recovery as the main drivers for further gains. Investors who view dips as opportunities may find select semiconductor names attractive while the sector extends its recovery.

This article first appeared on GuruFocus.

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